The Saudi Arabian government has just announced that private companies have three months to comply with the requirements of its Nitaqat or Saudisation programme. Private companies will be classified ‘red’, ‘yellow’ or ‘green’, according to their compliance with the stipulated quotas. Workers at ‘red’ companies will have the opportunity to move to ‘green’ companies, and not have their visas revoked.
There was much confusion when Nitaqat was first announced, with the initial interpretation being that expats would only be allowed to work in the Kingdom for six years. This prompted the Ministry of Labour to clarify that Nitaqat was not intended to “threaten the stability of guest workers in the Kingdom.”
While Saudi is experiencing an increased demand for labour at the moment as it undergoes something of a construction boom, with such major projects as the $27bn Makkah Development Plan, unemployment among Saudi nationals, and in particular the youth, is rising.
The Saudi government has recently boosted social and infrastructure spending, obviously having been sensitised to the civil unrest sweeping the region due to discontented local populations. It is important to interpret Nitaqat against this background of social development. Saudis account for a miniscule 10% of the total private-sector labour pool at present.
At present, the majority of Saudi nationals end up working for the government. While this is clearly not a tenable situation, the only way to dramatically boost the uptake in the private sector is through legislation.
However, there are many elements of the programme itself that will undoubtedly still need to be thrashed out in practice. For example, there will have to be some kind of a national register listing company classifications, and employers must have ready access to this information.
Commentators have pointed out that Nitaqat must not simply take into account employment numbers, but must be used to develop the depth of the Saudi labour pool itself. In this regard, there could be a danger of companies employing Saudis only to meet their quota, but having no intention to employ them gainfully, let alone develop them as a valuable resource. Saudisation is a process that the entire construction industry will have to buy into if it is to succeed at all.
Of course, it is unlikely that Saudis will want to assume the positions of general labourers – which is why foreign workers were imported in the first place. Hence they will need to be incorporated at some professional or management level. Undoubtedly this process will be a learning curve for all concerned. There are ingrained perceptions to counter on the part of the private sector, for example, that foreign workers are more efficient and cheaper to employ than locals.
I do not think anyone will deny that this will be a long and winding road that Saudi is embarking on. Emiratisation is also the subject of intense debate in the UAE, and the rest of the region will watch carefully to see how the Kingdom copes with the inevitable teething troubles of Nitaqat. At the end of the day, this will be to the benefit of the country industry, the country and the entire region.
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